Loftus represents a group of plaintiffs that invested in Felton’s cryptocurrency FLiK Token, an investment vehicle the plaintiffs claim T.I. also had a stake in.
And now, as of May 10, a class-action lawsuit has been filed in a federal district court in Atlanta on behalf of the investors, who said they paid $40 million and were told the tokens would substantially increase in value.
T.I. and Felton are accused of enticing investors to buy in at 6 cents per coin and said they were told it would be worth $14.99 in just a year and a half.
Plus, celebrities like Kevin Hart mentioned the cryptocurrency on social media and congratulated the “Live Your Life” rapper for starting it, and he was accused of making the offer seem more legitimate.
The value eventually increased to 21 cents per coin before it was worthless, and the suit alleges that T.I. and his co-defendants dumped the cryptocurrency afterward, then stopped all the social media promotions.
And besides the securities class action suit, that $5 million complaint from the investors in the initial coin offering was amended, so now Hart has been added for his connection with FLiK.
Loftus, who said Felton and T.I. were involved in a classic “pump and dump” scheme, said the government is now cracking down on cryptocurrency startups.
“This is an example where technology got a bit ahead of regulation and now that the SEC is catching up, a lot of ICO offerings are going to get pinched for violations just like this” said Loftus in a statement.
“Thinly traded cryptocurrencies like this can be manipulated just like a penny stock, so fraudsters can make a quick buck with a celebrity endorsement pumping the value up such as the endorsement made by Actor Kevin Hart in this case.”
In November T.I.’s attorney Albert A. Chapar sent a statement to Atlanta Black Star and said the rapper is far from a fraudster, because he was also duped by Felton.
“Tip is truly disheartened by the lawsuit,” said Chapar. “Tip did not receive a single dollar from Felton or any of the money alleged to have been invested by the Plaintiffs, nor did he have any ownership in the company.”
“Felton has made multiple misrepresentations as well as unauthorized statements about Tip’s involvement,” he added. “The terribly unfortunate truth is that Felton misused and took advantage of Tip’s name and likeness, thereby victimizing both the investors and Tip.”